American Society of Magazine Editors

MPA Files Comments in Remanded Exigency Case; Postal Service Contemplates Big Changes

While most of the attention-grabbing headlines about the Postal Service’s financial crisis are focused on the Service’s fragile future finances, the Postal Regulatory Commission (PRC) and mailing industry associations, including MPA, have also been looking backward, trying to bring the 2010 exigency case to its final conclusion. In May, the Appeals Court for the District of Columbia remanded the exigency case back to the PRC for further deliberation on a narrow question — how close a link must the Postal Service establish between an exigent circumstance and the requested exigent rate increase in cases where the Postal Service’s revenue shortfalls have multiple causes, only one of which is the exigent circumstance. In comments and reply comments submitted by MPA and industry allies in July, MPA argued for a tight link. Absent a strong causal link between the exigent circumstance and the proposed rate increase, allowing the Postal Service to raise rates more than inflation would undermine the very foundation of the CPI rate cap put into place in the postal reform law passed in 2006.

While awaiting the Commission’s decision clarifying the “due to” definition, the Postmaster General alleviated industry fears of an above inflation rate increase next year, reassuring association executives during a monthly briefing session that USPS will not seek to increase rates more than inflation in its next price increase, expected in January 2012. It is likely USPS will file new rates at the PRC in October, asking the Commission to approve a rate increase of about two percent based on expected inflation, for January implementation.

With Congress focused on the debt ceiling and deficit reduction in recent months, there has been little activity on the legislative front with respect to the multiple postal reform bills that have been introduced — by Senators Susan Collins and Tom Carper in the Senate and by Representatives Darrell Issa and Steven Lynch in the House. To spur Congressional activity, the Postal Service on August 12th put forth two radical legislative proposals; first, that it be allowed to remove postal workers from the federal health benefit and retirement systems and institute private systems, and second, that it be allowed to abrogate the terms of its collective bargaining agreements with its workers that prohibit layoffs. In the next few months, the Postal Service intends to move forward with several measures designed to reduce its significant excess capacity. These include elimination of Saturday mail delivery and a major downsizing of its retail and processing network. The latter change is likely to have significant impacts on overnight delivery service, and MPA will be a strong advocate for “sensible” network restructuring and shrinking work hours and excess workers while maintaining adequate service levels for time-sensitive publications.